Greece: A Volatile Situation

It was around springtime that the Samaras-Venizelos coalition government was flying high given that, after a long absence, Greece was able to return to the financial markets and float a new bond issue that was ten times oversubscribed and at an attractively low interest rate. This optimism, amid a general sense that the country had entered the final stretch in its quest to free itself from the supervision of its lenders, produced a result in May's European elections whereby the leftist "SYRIZA" party's marginal victory (3,8%) did not pose a risk to the optimism displayed by Greece's international supporters.

As such, the "New Democracy-PASOK" alliance had every reason to be hopeful of a positive outcome with respect to February's upcoming election for the President of the Republic, believing that the 180 parliamentary votes required were clearly in its grasp. Its belief was that none of the smaller parties would risk defeating the government and trigger an early election with potentially inconclusive results. In particular, the left of centre "DIMAR" party and the rightist "Independent Greeks" faction, both of whom saw their ranks significantly depleted in May, had every reason to support a mutually acceptable candidate and avoid a national vote that could prove precarious to their very survival.

Regardless, in lieu of laying low and letting things quietly play out until the crucial February ballot, the government, in an incomprehensible display of arrogance of power, dared impose a new tax, the single property tax, or ENFIA, on a startled and overburdened electorate and on the weakest groups there-in.

Prior to this measure, the state had been collecting property taxes as part of consumers' electric bills, as a special levy on those properties serviced with electric power. However, a decision was made to enlarge the tax base by encompassing any and all properties, even little, unreachable mountain tracts, thereby astounding an already devastated middle class.

In no time, the prevailing political climate was completely reversed with the vast majority of citizens turning against the government. Seeing five long years of their tolerance of painful over taxation, devastating wage cuts, stratospheric unemployment and a crippling lack of bank funding as being in vain, public opinion quickly turned into a fury against the administration.

Given the desperate state of the electorate, recent polls show "Syriza" with unheard of support, granting it a lead of 11 points and making it the dominant player on the issue of the election of the President of the Republic. With such popularity, "Syriza" has every reason to play hardball on the choice of the President, perhaps by forcing allegiances with the smaller parties or even by refusing to support any proposed candidate, thereby leading the country into an election with the distinct possibility of seizing power.

Not surprisingly, the Greek stock market, following a generally weak European trend but also a surging "Syriza," took a huge dip downward. Similarly, Greece's quickly widening bond spreads began instilling new waves of fear among prospective investors and among the coalition government.

Instead of analyzing the facts and laying blame at its feet for a slew of arrogant and sloppy decisions, instead of pinpointing the root cause of its huge blunders, the government attempted to fault "Syriza" for putting the country off course. At the same time, instead of trying to rectify a quickly unravelling situation, it continues to threaten the marketplace about the consequences surrounding a "Syriza" victory.

Regardless, the truth is that the people of Greece have no further patience nor any expectation of an amelioration in their economic status. After five years of deep wage cuts, high unemployment (27,8%) and a heavy tax load worsened by an unjust tax system, they have given up all hope that things can improve.

There is a perception that, despite repeated promises, nothing has or will ever change. Also, despite a much ballyhooed primary surplus in the current budget, the country's partners continue to persist in tightening the financial noose around Greece's neck, with the Germans, in particular, insisting on further austerity.

Envisioning that there is nothing to hope for, or, in effect, nothing to lose, the Greeks are beginning to regard a vote for "Syriza" as their last recourse. Of course, with its problems of inconsistency, without any concrete plan of its own for the economy and with its all too often untimely comments about Greece's European membership, "Syriza" poses a huge risk for the country and its investors.

As long as the Samaras-led government continues to act pompously and unsympathetically toward its citizens, however, Greece will have its head shackled to the guillotine. Until, and if, the axe drops, that is!